Barnes & Noble spins off college bookstores into separate education company.

Barnes & Noble’s College Bookstores Are Becoming Their Own Business

Barnes & Noble’s College Bookstores Are Becoming Their Own Business

Moneybox
A blog about business and economics.
Feb. 26 2015 4:43 PM

Barnes & Noble’s College Bookstores Are Becoming Their Own Business

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Yeah, because you keep buying your books on Amazon.

Photo by Mario Anzuoni/Reuters

Barnes & Noble, the retailer cursed with selling, you know, books, said on Thursday that it plans to spin off its college bookstores unit into Barnes & Noble Education, a separate publicly traded company this summer. The college business has been a lone bright spot for Barnes & Noble lately, with revenue that rose 1.9 percent to $751.3 million in the latest quarter (as compared with revenue that declined in the company’s retail and Nook segments). Last May, Barnes & Noble announced an ambitious plan to grow its number of college stores from 696 to 1,000 over the next five years. Nearly a year down the line, it has increased that number to 714.

The college bookstores spinoff will take the place of the Nook business separation that Barnes & Noble had been planning since last June. According to the Wall Street Journal, that plan was nixed after a 55 percent drop in Nook revenue during the most recent holiday season made it a tough sell for investors. From the Journal:

Under the new plan, the Nook business will stay with the core retail stores group, which also includes BarnesandNoble.com.
John Tinker, an analyst at Maxim Group, said the new structure makes sense. “What this does is create a pure play for investors interested in the college market,” said Mr. Tinker. “Keeping the Nook inside the retail group is logical because they don’t currently know where it stands. Nook losses are shrinking, but it is still uncertain what’s really happening there.”
Barnes & Noble has long argued it needs to have a digital offering for its customers. Retaining the Nook business will allow it to do that.

Michael Huseby, Barnes & Noble’s CEO, said in a statement that spinning off the company’s college arm “will create an industry-leading, pure-play public company with more flexibility to pursue strategic opportunities in the growing educational services markets.” Barnes & Noble values its college business at $775 million, according to a filing, and its spinoff is expected to be complete by the end of August.

Barnes & Noble’s stock rose nearly 7 percent Thursday on the news.

Alison Griswold is a Slate staff writer covering business and economics.